Contracting out of Government Services

Contracting out of Government Services

CHAPTER 2

COMMONWEALTH IT REQUIREMENTS

The Commonwealth's IT Environment

The ITRG report Clients First notes that the early and extensive adoption of information technology by the Commonwealth has had a major influence on the structure and costs of Commonwealth IT. Clients First identified what it saw as the main characteristics of the Commonwealth IT environment:

    * a very high level of use of IT;

    * a number of 'aged legacy sytems reflecting the early adoption of IT', primarily involved in transaction processing;

    * a large and uncoordinated investment in mainframe systems;

    * an IT specialist base tilted towards operations maintenance and operations as opposed to new initiatives;

    * adoption of desktop computing with the ratio of PCs to staff approaching 1:1;

    * information technology developed to suit agency or program needs reflecting the tendency to treat IT requirements as unique to individual agencies; (though the report notes some exceptions to this, notably the widely adopted NOMAD human resource management system);

    * discrepancy between Commonwealth and private sector salaries for IT specialists leading to difficulties in retaining and recruiting staff of an appropriate calibre; and

    * fragmented policy responsibility for IT.[1]

Clients First provided the first service-wide summary of IT usage by Commonwealth agencies. IT usage includes the full range of hardware and applications from fifty mainframes with a capacity of over 4600 MIPS[2] to over 100 000 PCs. While most PCs were IBM compatible and there was considerable standardisation of systems on the desktop there was also a considerable range of applications in use. Twenty-six e-mail systems, nine human resource management systems and twenty different financial management systems were being used.[3]

The IT environment has undergone significant changes in recent years particularly with the almost total adoption of PCs across the Commonwealth. Clients First commented that,

The focus is moving away from the traditional mainframe to the desktop with the use of PCs and Local Area Networks becoming almost universal ... Such an investment provides significant potential for the movement and exchange of information and has the capability to empower agency staff and enable the re-engineering of government.[4]

The concentration on outsourcing as an end in itself has tended to obscure the fact that Commonwealth IT has developed in an ad hoc way. The opportunities now exist for rationalisation across the service. The creation of the position of Chief Government Information Officer and the Office of Government Information Technology, the adoption of a whole of government approach to IT development and the clustering of agencies for the purposes of outsourcing their IT needs are all attempts to encourage that rationalisation.

Service Requirements

The tender documents prepared by the Departments of Defence and Veterans' Affairs with regard to their recent tendering processes give very detailed insights into the IT requirements of two major government departments which have been market tested.

DVA, which is perhaps more typical of the APS, has a mainframe requirement of 70 MIPS and 176 gigabytes (Gb) of disk storage capacity. It also operates a national wide area network (WAN) linking the department's national office in Canberra and six state office local area networks (LAN) with thirty Compaq servers and 3 000 PCs and terminals. The department also has telephone access to its mainframe and LANs and voice equipment served by PABXs. The Veterans' Review Board also has LANs in six states and the ACT linked by a WAN. In addition to these systems the Department maintains extensive applications development and production environments.

The requirements to be outsourced included:

    * process driven (mainframe and distributed) applications to be provided by the contractor on a 24 hour a day, seven day a week basis, operations, maintenance, monitoring of relevant performance and ongoing enhancement of processing capabilities;

    * production control and scheduling for mainframe and distributed applications;

    * data storage management and tape and cartridge mangement;

    * print operations;

    * technical support of system software;

    * provision of a wide area network and associated engineering, monitoring and optimisation, administration and maintenance; and

    * local applications including LANs including hardware, systems servers and support; distributed resources including servers and desktop equipment plus software, applications and peripherals.

In addition the contractor was to comply with the department's and the Commonwealth's security and privacy requirements, operate a help desk, provide training and appropriate manuals etc to DVA staff for all the services provided by the contractor.

The services retained within the department include:

    * database administration, tailoring and monitoring database software and various support activities; and

    * developing, maintaining, revising and updating security procedures and managing and administering access to the systems.

As the committee's round-table public hearing showed, however, the requirements of Commonwealth departments and agencies are quite varied. While there is clearly scope for rationalisation in the provision of IT services, it must not be at the expense of genuine agency need or preference.

It is estimated that the IT services 'in scope' for outsourcing represent about half of the Commonwealth's total IT expenditure of approximately $2 billion. As the committee notes elsewhere a significant proportion of that funding already goes to the private sector through hard and software acquisition and the use of external consultants.

Footnotes:

[1] Clients First, op. cit., pp. 8-9.

[2] Millions of Instructions Per Second.

[3] Clients First, op. cit., pp. 5-7.

[4] ibid., p. 8.